What Does It Really Cost To Sell Your Home?
Originally published on Linkedin.
Are you aware of the full range of costs that come with selling a home? It’s possibly more than you think, and these costs – a series of relatively small expenses that go with the agent’s commission – is one of the major reasons that you should never feel pressured to rush into a sale.
One of the things that we consistently advise the property sellers that we work with is to resist the temptation to undersell. This is particularly true when the market is flat or slowing, as we currently see in parts of Australia. Rather than hurry to sell by taking a lower offer, we advise clients to find the right buyer even if it takes longer, because otherwise, once these costs are tallied up, the money made from the property sale might be significantly less than expected.
There’s a useful report on Domain that has broken the typical cost of selling a home down, with the long-and-short of it being this summary:
General maintenance and cleaning: varies based on property
Staging and professional styling: $2,500 – $6,000 depending on property size
Movers: $400 to $2,000 depending on the amount of furniture and distance covered
Marketing, photography and videography: $4,000 – $10,000
Agent’s commission: 1.2 – 2.8 per cent inc GST, but this will vary across the country
Auctioneer: $500 – $1,000
Conveyancer fees: $1,000 – $2,000
Mortgage discharge fee: $300 – $1,000 depending on the lender
Capital Gains Tax – varies depending on property and location
So, even before you take into account the variables – the agent’s commission and the capital gains tax, you would be looking at costs ranging from $8,700 to $22,000.
It’s worth noting two things here: Firstly, these cost outlines are within the fair range and anything that falls outside of these costs should be questioned, as they’re likely to be too cheap for the service or project scope, or exorbitant. For marketing, photography and videography, for example, you want quality imagery that does a good job of positioning your property to the right audience, and that is going to cost a few thousand dollars to do right. Trying to do it more cheaply can have the opposite effect of turning off potential buyers.
Secondly, you shouldn’t look at any of these costs as optional. Many of them (conveyancer fees, mortgage discharge fees, auctioneer hire) aren’t avoidable at all if you want to sell the property, while others (staging & professional styling, marketing, maintenance) are “value-adding”. In other words, by paying for these things your property also has a greater potential to sell for more. Most people want to present their properties to the broadest possible audience in a way that showcases their best qualities for this reason.
How to avoid underselling
The key to sidestepping the risk of underselling is to find the right agent, rather than looking for ways to cut costs. The old adage argues that you need to “spend money to make money,” but that, of course, is a simplistic perspective. What’s important is to make sure that the money that you’re spending is going to the right people, and that you have reasonable and realistic expectations of the return that you’ll make from the sale, to factor against the costs of selling the property.
It all comes down to research. At the start, you should reach out to the three leading agents in the local area. Look at their prior performance, and, in particular, look for what they’ve done with properties that are similar to yours.
Then, armed with the right research, negotiate with all three agents and see what they promise. Once again, the key here is that you want a realistic expectation. The agent that promises you the highest value sale might sound good, but if you then spend money to prepare the property with that return in mind, only to ultimately have to sell the property for less, you will have overspent on the costs of the sale.
It may well be that the agent is presenting you with the most realistic price, but understanding why the other two leading agents are setting more modest expectations is valuable information that you can still use when setting the budget for the sale.
Having a good understanding of the total expected costs from a property sale is immensely important in ensuring that you don’t end up underselling and in a financially disadvantageous position. By finding the right agent, and then having a good negotiating position, you’ll be able to ensure that what you spend on selling the property ends up boosting the overall returns from it.
If you are looking to sell a property and want a negotiation partner that will help you gain the maximum return from it, contact us at Hello Haus – Australia’s specialist negotiation partner to sellers across the country.